Back to top

Analyst Blog

We are maintaining our Neutral recommendation on Embraer S.A. (ERJ - Analyst Report).

We are optimistic on Embraer’s efforts to improve productivity and efficiency alongside a firm order backlog. The company’s margin consistency and strict control over SG&A costs are commendable.

Embraer’s worldwide customer order servicing and on-time deliveries of corporate, defense jets and executive jet-support structures strengthen its global footprints. The company strengthened its position in the security solutions business across the Brazilian as well as other foreign governments generating healthy revenue across segments. We anticipate further expansion for the company across both commercial and defense aviation market in the coming quarters.

The company continues to invest in the global support network incorporating new service centers and dealers. All such strategic deals and partnerships are anticipated to lend more stability to the company’s investment stream and ensure future growth.

However, Embraer operates in a commercial aircraft manufacturing industry, which is highly competitive. Thus, the company requires continual technological and performance enhancement to keep up with the growing demand in the commercial aircraft manufacturing market. Such measures for retaining market share and remain competitive involve recurring costs.

Rising expenses have been a nagging concern for Embraer with cost of sales and services staying on the upside over the last few quarters. Administrative, selling and research expenses as well as fuel charges continue to exert pressure on operating margins, hindering growth.

Nevertheless, currency fluctuations, rising wages and heavier tax burden aggravate margin pressure and continue to severely impact the company’s earnings growth.

Brazil-based Embraer’s product portfolio supports strong customer orders worldwide. Its diversified global footprint offers fierce competition to industry operators of the likes of Boeing Co. (BA - Analyst Report), Erickson Air-Crane Incorporated (EAC - Snapshot Report) and Northrop Grumman Corporation (NOC - Analyst Report).

The company currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%